Coal’s out, but that isn’t bad news for Australia’s economy — as LNG and battery minerals will be there to soften the blow.
With thermal coal currently making up 5 percent of Australia’s exports and contributing 1 percent to its GDP, there have been fears around how the Australian economy would get on given the world is moving away from the black rock.
However, the RBA’s head of economic analysis, Alexandra Heath, told an industry audience yesterday that the impact on the economy would be muted.
“Because this transition is projected to be relatively gradual, the effect on annual GDP growth would be relatively small, especially if the offsetting effects of increased demand for LNG or inputs into renewable energy generation are taken into account,” she said.
“There is also expected to be stronger demand for a range of metals that are inputs into batteries, especially lithium, and are used intensively in renewable generation and in electric vehicles — such as copper.”
She pointed to a surge in Australian lithium space as evidence that Australia’s economy could shoulder the burden of a move away from coal, with several mines in WA starting up over the past few years.
Instead of a macro impact, she said, the pain of a shift away from coal would be felt most keenly on the ground in coal mining areas.
Given the imbroglio over Adani’s controversial Carmichael Mine in Central Queensland became a ‘city v country’ flashpoint during the recent federal election, the impact of a transition away from coal can’t be underestimated.
“But it is important to recognise that the negative consequences of such a transition will be focused on specific geographic areas and communities that are unlikely to be the same ones reaping the benefits,” Heath said.
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